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An Angry Birds Empire: Games, Toys, Movies and Now an I.P.O.

Rovio Entertainment’s “Angry Birds” game has led to a series of sequels, a line of toys and clothing, and a feature film.Credit
Columbia Pictures

LONDON — The digital world is littered with one-hit wonders — companies that tried to turn a single successful brand into a big-time business only to be eclipsed by changing technology and consumer tastes.

The maker of Angry Birds, Rovio Entertainment, hopes to defy that trend.

Rovio found success in a smartphone game that pitted a brightly colored feathered flock against an army of green pigs, spawning a series of sequels, a line of toys and clothing, and a feature film. Now, the Finnish company is planning an initial public offering that could value the company at roughly $2 billion, in a test of whether investors will find favor in a single franchise and whether the business can evolve.

Rovio helped usher in the rise of smartphone games, building a juggernaut around the Angry Birds brand. In the game, released in 2009, users fling birds at elaborate structures built by pigs that have stolen their eggs.

Rovio has ridden the wave of a rapidly expanding mobile gaming market. The industry’s worldwide revenue was about $16 billion in 2012 and is forecast to top more than $50 billion this year, according to data from SuperData Research, a data provider on the games industry.

But Rovio now needs to prove it can profit beyond the success of Angry Birds. Its games business, which includes the original Angry Birds and more than a dozen spinoff titles, accounted for 79 percent of its revenue in the 12 months through June.

“They need to find a way to diversify their brand portfolio in the future,” said Atte Riikola, a research analyst at Inderes in Helsinki, Finland. “They have had problems in their history when trying to diversify, so it won’t be an easy task to do.”

The company has done a good job creating offshoots of its flagship game, like Bad Piggies and Angry Birds Match. The company has also introduced several non-Angry Birds titles in recent years, including a puzzle game called Fruit Nibblers and a game tied to the pop singer Shakira.

“The hardest part in the app market is to find the users, to get people to download your game,” said Tero Kuittinen, chief strategist at Kuuhubb, a Finnish company focused on lifestyle and mobile video game applications. “If you have a well-known intellectual property — you have something that is instantly recognizable, James Bond, ‘The Wizard of Oz,’ any kind of property like that — it helps you a lot. Why wouldn’t they leverage Angry Birds?”

But it is still unclear whether Rovio has the framework or model to fuel innovation and expand beyond its main brand. The mobile gaming environment is especially competitive.

“At a certain stage, you will need a formula for more efficient innovation success,” said Mark DiMassimo, the chief executive and chief creative officer at the advertising agency DiMassimo Goldstein. “You’re going to need to get to winners faster than other folks, more efficiently than other folks. If you don’t, you’re going to be on the losing end of the category.”

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The announcement of the public offering marks a turnaround for Rovio, which struggled financially in the years after the initial release of Angry Birds. The company, which started out by selling its games, was caught flat-footed as consumers gravitated to games offered through a so-called freemium model, in which players download the game for free and pay for additional features. Rovio has since switched from paid apps to free downloads of its games.

Mikael Hed, a co-founder, stepped down as its chief executive in 2014, and the company announced plans to cut nearly 40 percent of its work force the next year. (Mr. Hed is still executive chairman of Rovio Animation, which helped bring “The Angry Birds Movie” to the big screen last year.)

Rovio returned to a profit in 2016 and reported revenue of 191.7 million euros, or about $228 million, last year.

Rovio is the latest game maker to turn to the public markets after becoming a cultural phenomenon, following in the footsteps of Zynga and King Digital.

Zynga, the company behind not only FarmVille but also Words With Friends, was valued at $7 billion when it went public in 2011. Its shares are now trading at a third of the initial price.

The company rose to fame with social games played on Facebook, but it was slow to recognize the move to mobile gaming. While it has since shifted its focus, the company has not been able to repeat its earlier success.

King Digital, the Swedish maker of Candy Crush, went public in 2014, but was sold for about $5.9 billion a year later to Activision Blizzard. It sold at a discount to its initial listing price as it struggled to replicate the success of its biggest hit.

The founder of Supercell, a Finnish rival behind the hit Clash of Clans, opted not to pursue an initial public offering, instead selling a 51 percent stake to the Japanese telecommunications giant SoftBank in 2013 for about $1.5 billion. Last year, the Chinese internet giant Tencent paid $8.6 billion for a controlling stake in Supercell.

Rovio said that the aim of the initial public offering was to help it carry out a growth strategy, and that it would use its shares for possible acquisitions and rewards to its employees.

Rovio said the initial public offering would consist of the sale of stock by its main shareholder, Trema International Holdings, and other shareholders. The company is also seeking to issue additional shares worth €30 million, or about $36 million, in the offering.

“That’s really the question for the market around this I.P.O.: To what extent do we believe the company can exploit its existing intellectual property, and to what extent can it go again and deliver another big hit?” said Will McInnes, the chief marketing officer at Brandwatch, which monitors social media trends.